Lionel Freedman, Inc. v. Glens Falls Ins. Co.
| Decision Date | 07 January 1971 |
| Citation | 27 N.Y.2d 364,318 N.Y.S.2d 303,267 N.E.2d 93 |
| Parties | , 267 N.E.2d 93 LIONEL FREEDMAN, INC., Respondent, v. GLENS FALLS INSURANCE COMPANY, Appellant. |
| Court | New York Court of Appeals Court of Appeals |
William D. Hand, Jr. and Thomas A. Harnett, New York City, for appellant.
Sanford C. Levine, White Plains, for respondent.
Plaintiff, a tenant of commercial premises at 321--325 East 73rd Street in New York City, is insured against its liability by defendant. The Manufacturers' and Contractors' Liability Policy held by plaintiff classified the hazards into four divisions: (1) Premises-Operations; (2) Elevators; (3) Independent Contractors; and (4) Products-Completed Operations. Coverage was maintained only under Division 1, Premises-Operations.
A negligence action was commenced against plaintiff after an accident in which a man fell into an elevator shaft at the street level and subsequently died. Plaintiff was charged with negligence in having moved the elevator car without sufficiently securing the shaftway door and with the generally negligent operation of the elevator. The complaint was broadly drawn and contained, Inter alia, allegations of negligence against plaintiff in connection with the maintenance of the first floor hallway.
Plaintiff demanded that defendant defend that negligence action in plaintiff's behalf. Asserting that the complaint did not allege facts within the scope of the policy, defendant refused. This declaratory judgment action, seeking a determination of both the obligation to defend and coverage, was commenced.
Because the contractual obligation to defend is dependent upon the coverage of the policy, the relevant provisions will be stated in considerable detail.
The location of the premises covered by the policy is described as follows: 325 East 73rd Street, New York, same and elsewhere in State of New York, Entire 4th and 5th floor.
The hazards covered under Division 1 are defined as '(t)he ownership, maintenance or use of premises, and all operations.'
Under Division 2, the protection not purchased by plaintiff, the hazards arising from '(t)he ownership, maintenance or Use of any elevator designated in the declarations' (emphasis supplied) are covered.
Under the heading 'EXCLUSIONS', the policy provides that it does not apply 'under division 1 of the Definition of Hazards, to elevators'.
Under the heading 'CONDITIONS', elevator is defined as 'any hoisting or lowering device to connect floors or landings at any building owned, rented or controlled by the named insured, Unless the named insured owns, rents or controls only a part of the building and does not operate, maintain or control the elevator, whether or not such device is in service, and all appliances thereof, including any car, platform, shaft, hoistway, stairway, runway, power equipment and machinery' (emphasis supplied).
Defendant agreed to defend actions under its policy as follows:
'With respect to such insurance as is afforded by this policy for bodily injury liability and for property damage liability, the company shall
'(a) defend any suit against the insured alleging such injury, sickness, disease or destruction and seeking damages on account thereof, even if such suit is groundless, false or fraudulent'.
Plaintiff argues that it rents 'only a part' of the building and does not 'operate, maintain or control the elevator' and that, consequently, the exclusion or separately available coverage of elevators as defined is not applicable. In the alternative, plaintiff asserts that, regardless of the probability of recovery, defendant is obligated to defend because the allegations in the complaint charge negligence within the coverage of the policy.
The courts have recognized that the obligation to defend is broader than the duty to pay (Goldberg v. Lumber Mut. Cas. Ins. Co., 297 N.Y. 148, 154, 77 N.E.2d 131, 133). It extends to any action, however groundless, false or fraudulent, in which facts are alleged within the coverage afforded by the policy (Prashker v. United States Guar. Co., 1 N.Y.2d 584, 154 N.Y.S.2d 910, 136 N.E.2d 871). This duty includes the defense of those actions in which alternative grounds are asserted, some within and others without the protection purchased. But, if we can determine that no basis for recovery within the coverage of the policy is stated in the complaint, we may sustain defendant's refusal to defend.
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